Been booted off FRS - but turnover <£225k.

[kryten22uk]

Got a letter from HMRC saying from their "records" as my turnover was now >£225k, I have been removed from the FRS. However my latest company accounts just submitted show a turnover of <£225k (albeit only slightly less). I am operating withing the rules, so why removed from the scheme? I reckon the scheme is worth a good £1300 per month to me.

[Nixon Williams]

The VAT office will have looked at your VAT returns.

If you believe that your turnover will not exceed £225,000 (including VAT) and that the past tuenover was a spike due to a "one-off" etc then you can appeal that they review their decision.

Your accountant should be able to handle this for you.

Alan

[RichardCranium]

Is it 'cos you're under the threshold only because you're in the FRS?

What I first wrote, and am still considering whether it was over the top:

I think if I was on over £900 per day I'd have the nous to ring the number on the letter and ask them.

But then, if I was on £900 a day I'd be looking for all manner of spurious reasons to tell everyone I was on £¼m a year too.

Although, I'd expect someone on £900 a day to be too busy to work out that if they're just under the threshold because they are in the FRS then maybe that is why.

Mind you, the entire team of utter knobs on £900 to £1,500 per day that my previous ClientCo dismissed for having delivered bugger all in 2 years couldn't sort out a financial system upgrade, so maybe I'm being too harsh, just 'cos I'm bitter.

[kryten22uk]

so maybe I'm being too harsh, just 'cos I'm bitter

Maybe you didnt like those guys you mention, but I doubt I'm in that industry so dont tar everyone with that brush. Basically I ask cos rules is rules. So if they publish how it works, only to have some other way of working then it aint fair.
Besides, how do you know how man people I employ to get that 225k?

Is it 'cos you're under the threshold only because you're in the FRS?

Ok, so maybe I hadnt understood the details. I presume you're meaning that the "turnover" figure is the gross sales * (1+FRS%), rather than *(1+17.5%). This might be the reason, although the wording on the letter just says "tax inclusive value of all supplies", which to me still suggests the latter.

[kryten22uk]

The VAT office will have looked at your VAT returns.

If you believe that your turnover will not exceed £225,000 (including VAT) and that the past tuenover was a spike due to a "one-off" etc then you can appeal that they review their decision.

Your accountant should be able to handle this for you.

Alan

I have forwarded to the accountant, but think its doubly unfair, as in the past year I had quite a lot of expenses added to my invoices, so not profit generating, and to the extent that I was probably making a loss on the FRS, but now I dont have those expenses I dont get to benefit from FRS margin. The "spike" isnt a one-off as periodically I have financial periods with heavy expenses followed by periods with low expenses. So cant say it wont happen again next year.

[DeludedAussie]

I have forwarded to the accountant, but think its doubly unfair, as in the past year I had quite a lot of expenses added to my invoices, so not profit generating, and to the extent that I was probably making a loss on the FRS, but now I dont have those expenses I dont get to benefit from FRS margin. The "spike" isnt a one-off as periodically I have financial periods with heavy expenses followed by periods with low expenses. So cant say it wont happen again next year.

Whats stopping you starting a new company? Apply for FRS as normal - If you are invoicing 225K a year why dont you have two separate companies so that they each have 115K

[northernladuk]

Whats stopping you starting a new company? Apply for FRS as normal - If you are invoicing 225K a year why dont you have two separate companies so that they each have 115K

Jesus Christ. Words fail me

[DeludedAussie]

Jesus Christ. Words fail me

Umm - Why exactly

You obviously have a huge brain - Can you explain to people who have a small brain

yes the ones in finance like me on >600 a day with a Phd

[northernladuk]

Umm - Why exactly

You obviously have a huge brain - Can you explain to people who have a small brain

yes the ones in finance like me on >600 a day with a Phd

Having a Phd and >600 rate does not mean you instantly have a grasp on running a business and all the other aspects. I am sorry to say looking at your posting history this area is very sadly lacking, don't take my word for it, read the flames.

He starts two companies up.. How does he bill his client then? Submit two invoices? One for each company? That looks really pro.
Running two companies, both billing the same client. HMRC will be all over that like a rash. You don't fudge your businesses to get under targets. That screams fraudulent activity.
If he has to pay more VAT on his income that means he owes it. Making two companies to avoid paying more VAT that is rightly due is fraud.
What would you do if you mobile phone provider starting issuing you two bills inorder to save on Tax/Vat? You would run for the hills wouldn't you?

I am not a VAT/business/accounts expert but somethings are just common sense and yes need looking in to but you can't just come up with these ideas off the cuff and not expect to get flamed.

Some of your ideas are just ridiculous I am afraid and show a certain level of unprofessionalism and lack of thought. Letting Co House strike you off so you can collect all your money for nothing, closing company down to get 1% VAT a year, trying to open accounts in tax havens etc. It is all cowboy stuff and not the right approach to running a good solid business. Any one of these can ruin your contracting future and worse still get you in trouble with the law. One or two questions fine but it just goes on and on hence the constant knocks you get.

[DeludedAussie]

Having a Phd and >600 rate does not mean you instantly have a grasp on running a business and all the other aspects. I am sorry to say looking at your posting history this area is very sadly lacking, don't take my word for it, read the flames.

He starts two companies up.. How does he bill his client then? Submit two invoices? One for each company? That looks really pro.
Running two companies, both billing the same client. HMRC will be all over that like a rash. You don't fudge your businesses to get under targets. That screams fraudulent activity.
If he has to pay more VAT on his income that means he owes it. Making two companies to avoid paying more VAT that is rightly due is fraud.
What would you do if you mobile phone provider starting issuing you two bills inorder to save on Tax/Vat? You would run for the hills wouldn't you?

I am not a VAT/business/accounts expert but somethings are just common sense and yes need looking in to but you can't just come up with these ideas off the cuff and not expect to get flamed.

Some of your ideas are just ridiculous I am afraid and show a certain level of unprofessionalism and lack of thought. Letting Co House strike you off so you can collect all your money for nothing, closing company down to get 1% VAT a year, trying to open accounts in tax havens etc. It is all cowboy stuff and not the right approach to running a good solid business. Any one of these can ruin your contracting future and worse still get you in trouble with the law. One or two questions fine but it just goes on and on hence the constant knocks you get.

This is a forum whose sole purpose is to provide ideas and guidaance around accounting issues - If you want to live a boring life go and hang out in General.

It is not fraud to organise your tax affairs in the most advantageous way possible

If the OP is really billing one client 225K (unlikely) then yes little leeway

What is probably happening is he has a few clients - If that is the case then there is nothing stopping him from asking clientA to pay CompanyX and ClientB to pay CompanyZ